An IRS non filer of taxes is a serious offense and may cause you to accumulate IRS debt when your non filed tax returns are filed.
You create BIG tax problems when you are one of the many IRS non-filers and have unfiled or delinquent tax returns (don’t submit your income tax returns with the IRS).
People think that you need a tax attorney to solve your back taxes, but a tax professional like a CPA can help with your tax issues.
It’s not hard to get behind on your taxes and have a tax problem.
Perhaps there was a death in the family or you suffered a serious illness.
Whatever the reason, once you haven’t filed for several years, it can be tempting to continue letting it go.
However, not filing taxes for 10 years or more exposes you to owing steep penalties and a potential prison term.
There’s No Time Limit on the Collection of Taxes For Non Filers
If you are one of the millions of non filers and have old, unfiled federal income tax returns, it may be tempting to believe that the IRS or state tax agency has forgotten about you. However, you may still be on the hook 10 years later. If you don't file and owe taxes, the IRS has no time limit on collecting taxes, penalties, and interest for each year you did not file. It’s only after you file your taxes that the IRS has a 10-year time limit to collect monies owed.
If You Do not File Voluntarily a Substitute Return can be Filed
If are fit in the classification of non filers and you fail to file, the IRS may file a substitute return for you. The Internal Revenue Service utilizes income that has been reported to them, like wages, interest income, subcontractor payments sale of property, and so on. The IRS then presumes you are single, have no dependents, and make use of the standard deduction. A Notice of Deficiency CP3219N (90-day letter) will be sent proposing a tax assessment.
You will have 90 days to file your past-due tax return or file a petition in Tax Court. If no action is taken on your part, the IRS will proceed with a proposed assessment. If the IRS files a substitute return, it is still in your best interest to file your own tax return to take advantage of any exemptions, credits, and deductions you are entitled to receive. The IRS will generally adjust your account to reflect the correct figures.
Collection and Enforcement Actions for Non Filers
The return the IRS prepares for you (proposed assessment) will lead to a tax bill, which, if unpaid, will trigger the collection process. This can include such actions as a levy on your wages or bank account or the filing of a notice of federal tax lien. If you repeatedly do not file, you could be subject to additional enforcement measures, such as additional penalties and/or criminal prosecution.
How to file back taxes for multiple years
Here are three steps to follow:
Gather prior-year documents. You'll need tax documents for the year you're filing your tax return for (e.g., you'll need your W-2, 1099s, or other documents from 2018 if you're filing your 2018 tax return). If you don't have those documents, you can request a tax transcript from the IRS for that year (here's how to do that). Although you won't get exact photocopies of the documents, you'll get the information contained in those documents, which is what you'll need to get your return done.
Use the right year's tax forms. Don't file a 2018 tax return using 2020 tax forms. Tax rules and tax forms are different every year. (Here are some important tax forms to know.)
Don't be afraid to ask for help. Tax rules change every year, and you'll need to ensure you're applying the right rules to the right year. Good news: Many tax software packages allow you to file prior-year tax returns.
UNDERSTANDING UNFILED TAX RETURNS
A taxpayer who has unfiled tax returns is called a nonfiler. The act of not filing one’s tax returns is a crime. You can possibly face imprisonment for a length of time proportional to each year of the unfiled tax return.
While the IRS does not put a bulk of taxpayers in jail or monetary fines ($25,000 for individuals and $100,000 for corporations) for failing to file tax returns, it is not a valid excuse to make this mistake.
Even if you have not received any notifications from the IRS, do note that they will catch up with you sooner or later.
Frequently Asked Federal Income Tax Return Questions
How Long Does It Take IRS To Process Non Filers?
Generally, the IRS takes anywhere from 4 to 8 weeks to process a return that has been filed without any accompanying tax forms. For nonfilers, the wait time can be significantly longer, as the IRS will need to take additional time to determine your filing status and levy any applicable penalties. It's best to consult with a tax professional to find out how long the process will take in your specific case.
What Is The Statute Of Limitations On Unfiled Returns?
The statute of limitations on unfiled federal tax returns is three years. After that, the IRS can no longer prosecute you for not filing your taxes. However, they can still come after you for any unpaid taxes that you may owe. If you have not filed a return and it's been more than three years since the return was due, it's best to file as soon as possible to avoid any penalties or fines. The sooner you file, the sooner you can start resolving any potential problems with the IRS.
How To File Unfiled Tax Returns?
There are a few ways to file unfiled returns, depending on your specific situation. You can either file an extension and then file the returns later, or you can go ahead and file the returns without an extension but with all penalties for late return filing. There are also options for those who owe money on their taxes, such as payment plans or installment agreements.
To find out which option is best for you, it's best to speak with a tax professional. They will be able to help you understand your specific situation and give you advice on the best way to move forward.
How To Resolve Unfiled Returns?
There are a few ways to resolve unfiled tax returns. One option is to file an extension by the deadline in order to buy some more time to gather all of your information and complete your return. You can also submit a return for amended taxes if you find that you made mistakes on your original filing. And finally, if you owe money on your income tax liability, you can make arrangements to pay the IRS back over time. However, it's always best to consult with an accountant or tax specialist to find the best solution for your specific situation.